Job Creation

A businessman does not spend his day considering how a job is to be created. On the contrary, if he is a successful businessman, he spends his time thinking about those activities that he can engage in to produce a profit. Once he has determined the profitable activity, he then channels resources to achieve the desired result: making money.

It is from this profit motive, this potential increase in productive activity, that jobs are created. As a developer, I do not hire an employee before I have conceived of a construction activity that will earn me a decent return. I hire an employee when I have a productive need for his services. As Say so clearly understood, it is the productive activity that creates the employment that puts money in people's pockets that can then be used to purchase other products.

Fred Buzzeo on Job Creation.

Beast

The most alluring and dangerous deity in the United States is the omnipresent, syncretistic god of nationalism mixed with Christianity lite.

Michael Gorman in Reading Revelation Responsibly: Uncivil Worship and Witness: Following the Lamb into the New Creation (p.56).

Not Ready

Except for the very old, Americans have generally lived pretty easy, comfortable, safe, and prosperous lives.

That's why this downturn will be worse than the Great Depression. Americans are not prepared for adversity. During the Great Depression, most people still lived on farms. They heated their houses with wood they cut themselves. They grew their own vegetables. They canned their own fruit. They raised their own hogs. They knew how to survive.

That's not true today. We don't know what would happen in a major crisis. But people are not ready for it. They depend on the system...the cash machines and grocery stores...and the unemployment compensation and food stamps. I don't think they could stand it if theses things break down.

Bill Bonner's Particularly Gloomy Friend

Beauty

That's the great beauty of a real economy! It rarely takes you where you want to go...especially if you're an activist central planner or an interventionist finance minister. But no matter how much you struggle with it...no matter how badly you manipulate it...no matter how much you try to stitch it up with rules and regulations...

...it ALWAYS takes you where you deserve to go.

Bill Bonner

Democracy

If the idea of democracy is that voters put their heads together and select the most worthy candidate, the whole thing is a fraud. Just look at Congress. What voters really do is select the fellow with the best haircut, the best line of guff, or the smoothest fundraising machinery. And it helps to have name recognition. That’s how popular actors – such as Ronald Reagan and Arnold Schwarzenegger – were able to break into the business. People do not really select the best man for the job; they have no way of knowing what the job is or who would be best for it. Instead, they buy their candidates like bath soap...based on the jingle that most appeals to them.

Bill Bonner writing about America.

Government

William Godwin said,

Government can have only two legitimate purposes: the suppression of injustice against individuals...and the common defense against external invasion.

Fatal Attraction

One justification for democracy is that it provides us with ways of aligning government policies with the citizenry’s requirements and of holding governments accountable when their decisions do not accord with the majority’s wishes. But what happens when some citizens begin viewing these mechanisms as a means for encouraging elected officials to use the state to provide them with whatever they want, such as apparently limitless economic security? And what happens when many elected officials believe it is their responsibility to provide the demanded security, or, more cynically, regard welfare programs as a useful tool to create constituencies that can be relied upon to vote for them?

Samuel Gregg on Fatal Attraction: Democracy and the Welfare State

Fiction

Government is the great fiction through which everybody endeavors to live at the expense of everybody else.

Frédéric Bastiat

Debt is Dangerous

Debt implies a strong statement about the future, and a high degree of reliance on forecasts. If you borrow $100 and invest in a project, you still owe $100 even if you fail in the project (but you do a lot better if you succeed). So debt is dangerous if you are overconfident about the future.

Nassim Nicholas Taleb

Trade and Freedom

Trade does not require force. Free trade consists simply in letting people buy and sell as they want to buy and sell. It is protection that requires force, for it consists in preventing people from doing what they want to do … What protection teaches us is to do to ourselves in time of peace what enemies seek to do to us in time of war.

Wisdom from Henry George

Risk Models

The problem wasn’t so much with the models themselves, but with how they were utilized. Rather than being used to discipline individual traders and trading desks, they were used to justify bigger and bigger speculative positions, and more and more leverage.

1. The risk models that were commonly used on Wall Street failed abysmally. Not only did they fail to protect their users from a bad outcome, they made such an outcome far more likely. In short, the risk models added to systemic risk.

2. In part, this was a failure of statistical modelling. The techniques that the risk modelers used weren’t up to the task they set for themselves. But it was also a problem of how the models were used. Rather than looking on them as a useful but limited tool, banks and other institutions used them as a substitute for proper risk management, and as a justification for taking on more leverage and more risk. This explains how the risk models made the entire system more risky.

3. At it’s root, the problem is conceptual. The financial market isn’t a deterministic system underpinned by laws of nature, and attempts to treat it like one—such as contemporary risk-management techniques—are destined to backfire.

John Cassidy on Whats wrong with Risk Models

Merchants and Warlords

The economic surge across Europe at the turn of the first millennium created new opportunities for long distance trade. Merchants thus had an incentive to take political action to lower the transaction costs associated with doing business. The overlapping taxes and incompatible monetary systems of the feudal system gave them reason to escape to territory where they could conduct their business without interference from feudal lords.

Merchants who were able to form or settle in self-regulating towns, where impersonal legal codes protected their property rights and set predictable tax rates, prospered. In turn, this prosperity gave them the power and means either to form their own armies for self-defense against warlord predation, or to bargain with kings who promised them protection and universal fair trade rules that extended over larger territories

Marten, Kiberly in “Warlordism in Comparative Perspective”. International Security, Vol. 31, No. 3: Winter 2006/2007; p. 60.

Courage is Missing

Courage is always missing in politicians. It is like saying basketball players aren’t normally short. It isn’t a useful attribute. To be morally courageous is to say something different, which reduces your chances of winning an election. ..... My generation has been catastrophic. I was born in 1948 so I am more or less the same age as George W. Bush, Bill Clinton, Hillary Clinton, Gerhard Schröder, Tony Blair and Gordon Brown – a pretty crappy generation, when you come to think of it, and many names could be added. It is a generation that grew up in the 1960s in Western Europe or in America, in a world of no hard choices, neither economic nor political. There were no wars they had to fight. They did not have to fight in the Vietnam War. They grew up believing that no matter what choice they made, there would be no disastrous consequences. The result is that whatever the differences of appearance, style and personality, these are people for whom making an unpopular choice is very hard.

Traditionally leaders rose to power through wars or conquest. We have had six, seven generations of leaders who came to power exclusively by political manoeuvring, which is historically very unusual. It’s like inbreeding: there are no external inputs, no new kinds of people, only the political class breeding itself. This isn’t an argument in favour of war, just a historical fact.

Tony Judt on The Way Thing Are.

WW2 was a Failure?

Not one of the positive goals set forth in the Atlantic Charter and the Four Freedoms has been realized. There is no peace today, either formal or real. Over a great part of the world there is neither freedom of religion nor freedom of speech and expression. Freedom from fear and want is no~ an outstanding characteristic of the present age. The right of national self-determination, so vigorously affirmed in the Atlantic Charter, has been violated on a scale and with a brutality seldom equalled in European history."

No war in history has killed so many people and left such a legacy of miserable, uprooted, destitute, dispossessed, human beings.

William Henry Chamberlain in America's Second Crusade.

Fools and their Money

Capitalism doesn’t like it when idiots have too much money. So it uses people like Goldman to help take it away from them. That’s what Lloyd Blankfein meant when he said Goldman was doing “God’s work.”

We don’t know if God wanted Goldman to blow up the world economy…but capitalism seemed to be calling for it. And it looked like capitalism was going to blow up the bomb tosser, too. Unfortunately, the feds stepped in. They bailed out AIG…and the whole financial industry – including Goldman. Now, they lend the big banks money for practically nothing…which the banks lend back to the feds at 4%. The banks make money. They restock their reserves with US Treasury debt. And the feds get to finance their gigantic deficits. It’s great for everyone – until it blows up too.

Bill Bonner on Separating Fools from their Money.

Cultural Mandate

The only way to cultivate and fill the earth without descending into a barbaric struggle for survival is to take advantage of the social division of labor, capital accumulation and wise entrepreneurship. Allowing these sources of economic progress to flourish requires the security provided by peace and private property sustained by and combined with cultural values such as a forsaking of theft and low social time preferences.

Shawn Ritenour on Why Economics Should Be Important for Christians. The complete article is worth a read.

Jesus is Lord and King

Jesus in the Gospels... has received God's anointing as the chosen king, but another king is currently on the throne. The story of the Gospels is one in which Jesus inaugurates a new reign of God and deals a deathblow to the imposter king through his death on the cross. If the Cross is the defeat of the old king, the Resurrection is the enthronement of the new. Jesus now literally sits... at the right hand of God. Though the preexistent Christ has always been God's agent in the creation and rule of the world, the human Jesus is now joined to that role as Lord and king over all.

J.R. Daniel Kirk in A Resurrection That Matters

What is Money?

Aristotle, in the fourth century BC, was the first person to define what money is. And what is it? It’s a store of value and a medium of exchange. The paper we use today is a medium of exchange – it got that way because governments made it illegal not to accept it – but it’s not a good store of value. And it’s rapidly and radically becoming less of a store of value.

What we use as money today is actually not money; it’s currency. Technically, that’s simply a word that indicates a government substitute for money.

Doug Casey at the Daily Reckoning.

Patsy Revolt

There are more clowns in economics than in the circus. They invented an economic model that has been very popular for more than 50 years – particularly in the US and Britain........ The new theories seemed to give everyone what they most wanted. Politicians could spend even more money that didn’t belong to them. Consumers could enjoy a standard of living they couldn’t afford. And the financial industry could earn huge fees by selling debt to people who couldn’t pay it back.

Never before had so many people been so happily engaged in acts of reckless larceny and legerdemain. As time wore on, more and more people lived at someone else’s expense. Lobbying and lawyering became lucrative professions. Bucket shops and banks neared respectability. Every imperfection was a call for legislation. Every traffic accident was an opportunity for wealth redistribution. And every trend was fully leveraged.

If there was anyone still solvent in America or Britain in the 21st century, it was not the fault of the banks. They invented subprime loans and securitizations to profit from segments of the market that had theretofore been spared. By 2005 even jobless people could get themselves into debt. Then, the bankers found ways to hide debt…and ways to allow the public sector to borrow more heavily. Goldman Sachs did for Greece essentially what it had done for the subprime borrowers in the private sector – it helped them to go broke.

As long as people thought they were getting something for nothing, this economic model enjoyed wide support. But now that they are getting nothing for something, the masses are unhappy....

Taxes are going up. Services are going down. And taxpayers are being asked to pay for the banks’ losses…and pay interest on money spent years ago. Until now, they were borrowing money that would have to be repaid sometime in the future. But today is the tomorrow they didn’t worry about yesterday. So, the patsies are in revolt.....

The rioters can go home, in other words. The system will collapse on its own.

Bill Bonner on The Patsy Revolt.

Politics Cannot Be Fixed

We face a dilemma in that most Americans are committed to democratic governance and many Americans want elected officials to assume responsibility for matters that they cannot manage.

American politics is not broken: it is working in the dysfunctional way that it should be working, given its unwieldy size and scope. What may be breaking are naïve idealistic beliefs that politicians can use a large and intrusive government to serve "the people." And the demise of such beliefs would be a good thing.

The idea of public-spirited politicians acting through large and unlimited government is utopian.

The basic lesson here is that politics cannot be fixed.

D W MacKenzie on Politics Cannot Be Fixed.

Democracy is Temporary

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess (generous benefits) from the public treasury. From that moment on, the majority always votes for the candidate promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by dictatorship.

The average age of the world's greatest civilizations has been two hundred years. These nations have progressed through this sequence: from bondage to spiritual faith, from spiritual faith to great courage; from great courage to liberty; from liberty to abundance; from abundance to selfishness; from selfishness to complacency; from complacency to apathy; from apathy to dependence; from dependence back to bondage.

Alexander Frazer Tyler in "The Decline and Fall of the Athenian Republic," (1776).

Poltical Eschatology

We need to start thinking about church/state relations in eschatological categories. If we think of them in static categories, the Christian church will find it hard to avoid becoming reactionary. That kind of conservatism is the way of death.

The Marxists know what they are supposed to be doing right now because they have an eschatology of the state. They say that the dictatorship of the proletariat will eventually wither away, which is perfect nonsense, but they nevertheless do have an eschatology of the thing. But when believing Christians get involved in politics they are hampered by the fact that politics is inherently an eschatological discipline, and their eschatology is either lurid, confused, pessimistic, or non-existent....

So I want to think of where church/state relations are headed teleologically -- we need a political eschatology. This will orient us where we need to be oriented. Man was created to be informed by the past, but oriented by the future, not the past.

So the central question I am trying to ask and answer in this discussion is this: where is the Spirit taking us, considered in thousand year chunks?

Douglas Wilson on The Future is True East

Botox Economy

The global economy is currently taking the "botox" cure. A flood of money from central banks and governments – "financial botox" - has temporarily covered up unresolved and deep-seated problems.

Satyajit Das on the Botox Economy.

Pass the Parcel

It’s the last game of pass the parcel. When the tech bubble burst, balance sheet problems were passed to the household sector [through mortgages]. This time they are being passed to the public sector [through governments’ assumption of banks’ debts]. There’s nobody left to pass it to in the future.

David Bowers of Absolute Strategy Research

Symptoms

Governments and central banks have dealt with symptoms but not addressed the underlying causes of the Global Financial Crisis.

Satyajit Das on the Botox Economy